What Is Affiliate Marketing And How Does It Work?


So in this video, I’m going to be explaining
how the affiliate marketing industry works. And exactly what affiliate
marketing is. I’ll be defining terms for you and I’ll be boarding everything for
you right on this whiteboard right here. Affiliate marketing is sort of a jargon
filled complicated industry. They’re all these terms. Advertiser, publisher, traffic
source, etcetera. That have no meaning to people in normal day life. But I’m going to
attempt to really break things down for you in a way that you can understand. I’m
going to be using multiple examples and diagrams on this whiteboard to help you
understand this territory. This will be especially interesting for you if you
want to get into affiliate marketing. It’s a very lucrative world. I do
affiliate marketing myself and I run a multi-million dollar business. I started
earning millions of dollars in my young 20s. And you know hopefully this will
give you a good basis for understanding this industry. So, the first thing you
want to understand about affiliate marketing is what it is is it’s
commission-based marketing. It’s selling products on a commission only basis
online. Now, it’s very similar to door-to-door salesmen or salespeople
selling used cars or telemarketers. Basically, these are people that are
calling you on the phone or that are going door-to-door. They’re selling the
Encyclopedia Britannica a hundred years ago.
Now, these salespeople would say, “Hey, you could buy the Encyclopedia Britannica
for your family. It’s 100 bucks.” And if they sold the Encyclopedia Britannica
to you, $100 went to the company
and you know maybe they pocketed $50 or something like that. Whatever it was. The
company kept some money. Customer paid the money to make that happen.
Same thing with selling cars. If you buy a car from a salesman on a lot for a
thousand dollars, maybe $800 of that is going to the cars lot
and $200 of that is going to the salesperson and you know it came
from the customer. Now, in affiliate marketing, it’s very similar. It’s almost
the exact same thing. You have company, you have a customer and you have
an affiliate. Now, the company gives the product to the customer and the customer
gives the money to the company. The affiliates job is to connect the company
with the customer. And in return, the company pays the affiliates some money
and the affiliate connects the customer with the company, right? So, it’s a big
triangle. You know it’s a pyramid scheme. It’s a pyramid. Its pyramid. You know, it’s
not a pyramid. They could turn it and it’s different. It’s just basic commerce,
okay? It’s direct response sales. Now, what we call it in affiliate marketing
is there are a companies has offers. That’s what we call the products that
they sell. So for instance, let’s say going back to the Encyclopedia
Britannica example. The company that sold Encyclopedia Britannica’s might have
other things that the salesperson could sell the person. They might have
Encyclopedia Britannicas. They might also be selling of tutoring services to
help people’s children learn English or learn history. So, you know like an actual
service to help people, you know, learn more. A company can have multiple offers.
They can have multiple products that they offer Commission’s on. Now, generally
speaking, there are tens of thousands if not millions of companies that have
affiliate programs. It gets very complicated to find all of the different
affiliate programs that somebody might want to market. So, the way it works is we
have what’s called affiliate networks. So, what is often the case is an affiliate
is working with an affiliate network. Now, an example of affiliate network is
Clickbank, ShareASale, Avangate Commission Junction. Amazon is an affiliate Network.
Walmart has an affiliate Network. EBay has an affiliate Network. Target has an
affiliate network. With lots of different products from lots of different sellers
that you can earn a commission on. So, an affiliate might login to let’s say
Amazon. Amazon’s Affiliate Network and they can find any product that they want
to market all in one place. They can choose a lot
of different ideas of products to market. Now again, the way affiliate is marketing
to the customer is through what’s called a link or URL. And in some other videos,
if you want to learn the basics of do affiliate marketing. We’re going to have my
assistant put up a card on this YouTube video so you can go see my playlist on
YouTube. My free course on how to do affiliate marketing. Or you can subscribe
to my channel and you’ll get my free course on how to do affiliate marketing.
But you’ll get a link and you can advertise that link on Facebook posts on
snapchat on Instagram. You could put it on, you know, send it to somebody through
text message. You could send the link to somebody through email. It doesn’t really
matter how you send the link out. You could put it on a postcard and mail it
to somebody. It doesn’t matter. What matters is that somebody clicks on it,
that’s how you connect people with these companies. Now when a customer buys a
product from one of the companies that you recommended. Let’s say they bought a
product on Amazon that you recommended. They bought this book. What the affiliate
network will do is they will pay you the money. So, the customer pays the affiliate
network. Let’s say 2 dollar signs. And the affiliate network will pay you 1
dollar sign. So, they get money and you get some of it. You get. That’s your
commission for making that connection. Now, some examples of affiliate marketing
companies to make it really dead easy in your mind are let’s say Expedia.com. If
you’ve ever booked a flight online and you’ve used Expedia Priceline Orbitz or
any of the other companies that you can book flights through. All of these
companies are affiliate marketing companies. Expedia.com does not own any
airplanes. They don’t own any flight patterns. Expedia is an affiliate. You go
to Expedia.com and you buy from one of the airlines. You are paying United or
American Airlines some money. And for making that connection for Expedia.com
making that connection, they are getting a commission
for connecting you with that flight. To use some more examples. It is the same
logic with Airbnb or Uber. These are affiliate marketing companies. Airbnb
does not own any hotels. Uber does not own any cars. What they are doing is
they’re simply connecting you with somebody who is willing to rent out
their place or they’re connecting you with somebody who is willing to drive
you someplace. And Uber or Airbnb is making a little commission on making
that connection. Again, they don’t own any inventory. They are simply making that
connection. You can be an affiliate marketer. And all you need is a link to
make that connection. And you can earn a bit of commission if somebody uses your
service. Now, Uber does not earn any money if you don’t get a ride anywhere.
That makes sense, right? If you just install the app, uber doesn’t make any
money. Uber only makes money if you hire a driver to drive you somewhere. So
that’s what affiliate marketing is in a nutshell. Now, I hope that explains things.
It’s a bit of a complicated world but it’s really easy when it comes down to
it. You’re just making connections and you’re getting commissions for helping
make those purchase connections. Just like Airbnb, just like Uber just like
hotels.com or cars.com or any of these other
companies. Expedia. It’s a very simple industry. Now, if you’re looking to learn
more about affiliate marketing, that’s what my business is. I make a lot of
money doing it and I’ve a lot of friends all over the world doing it it’s the
easiest business to get started in the requires no technical skills, no
inventory. And allows you to live a life of freedom of location of time. I wake up
whenever I want and I can be wherever I want that my wife allows me to be now.
But the point being, if you want to learn more about this. Make sure you subscribe
to my channel and hit that notification bell. And you’ll get a free course on how
to get started with affiliate marketing. Now, if you like this video as well, make
sure to comment and tell me what would you like to learn about next and also
push that like button if this has been helpful for you
in learning and in your journey in any way.

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